Estate Planning and Planned Charitable Giving Presentation

Estate Planning & Planned
Charitable Giving Seminar
Pleasant Ridge Presbyterian Church
Greg Laux, Esq.
Attorney at Law
Kohnen & Patton LLP

Disclaimer
• This presentation is being provided as a public resource and general
informational service to members of Pleasant Ridge Presbyterian Church. The
information contained in this presentation is not intended to be nor does it
constitute legal advice, nor does the information necessarily reflect the most
current legal developments, and neither Greg Laux nor Kohnen & Patton LLP
make any warranties or representations, express or implied, as to its
accuracy. Neither Kohnen & Patton LLP nor Greg Laux individually assumes
no liability or responsibility for any errors or omissions in the content in this
presentation. Every individual’s situation is different, and you should not act or
refrain from acting based upon information provided in this presentation
without first consulting legal counsel.
• Kohnen & Patton LLP would be pleased to discuss your legal needs with you in
person. However, use of the materials in this presentation does not create an
attorney-client relationship between you and Greg Laux or between you and
Kohnen & Patton LLP. If you are interested in working with us on creating or
modifying your estate plan, or if you, your family, your friends, or your
neighbors need assistance with any other legal issue, please feel free to call me.

Quick Introduction – “Who is this guy?”
• Attorney at Law, Kohnen & Patton LLP
• Licensed to practice in Ohio and Indiana
• J.D. from the University of Cincinnati College of Law
• Former volunteer firefighter with the Arlington County Fire
Department in Northern Virginia, where I met my wife Sunny
• Former professional firefighter/EMT-B with 5 years of
experience with two different fire departments in the central
Virginia area
• Parish Council Member, Lector, St. Joseph’s Society Member,
and Christmas Tree Sale Guy at Nativity of Our Lord Parish

The Road to Cincinnati
• My wife Sunny got accepted to medical school in North
Carolina in May 2003.
• I became a full-time paid firefighter in Richmond,
Virginia in December 2003.
• We moved to Cincinnati in 2007 for Sunny’s residency
training in emergency medicine at University Hospital,
and bought a house in Pleasant Ridge on Schubert
Avenue.
• I started law school at NKU Chase in 2009, transferred
to UC Law and graduated in May 2012, and joined
Nativity shortly thereafter.

Estate Planning and Planned Charitable Giving
Seminar – Outline of Topics
• What happens to my property if I live in Ohio and
die without a will?
• Who will take care of my kids if I die without a
will?
• What is a will and why do I need one?
• What does “probate” mean?
• Are there ways to avoid “probate”?
• What are some easy ways I can leave a charitable
gift to PRPC in my estate plan?

“So what happens if I die
married with no will in Ohio?”

Definition of Probate
• What is “probate”?
–Probate is the formal court procedure that
must be followed in order to distribute
certain types of assets the decedent owned at
the time of death.
–Every county in Ohio has its own Probate
Court with its own rules and procedures.

Probate Property v. Non-Probate Property
• Probate Property – all property owned by the
decedent at death that will pass either by
intestate succession or by the decedent’s will
• Non-Probate Property – all property that will
pass directly to a named beneficiary or
beneficiaries upon the decedent’s death outside
of the probate process.

Four Categories of Non-Probate Property
1. Property Passing by Contract – life insurance proceeds,
401(k), 403(b), 457 retirement plan death benefits, IRA
death benefits, payable on death (“POD”) accounts
2. Property Passing by Right of Survivorship – joint
checking and savings accounts, jointly owned certificates
of deposit (CDs), homes owned by married couples
3. Property Held in a Living Trust – revocable or
irrevocable trusts created during the trust creator’s lifetime
4. Property Passing by Affidavit – an owner of real property
may designate who will receive the property at the owner’s
death by a transfer on death (“TOD”) affidavit

Property Passing By Contract –
Life Insurance
• Life insurance is one of the most common forms of
non-probate property.
• Ohio courts have ruled that a life insurance policy is a
contract, and the disposition of property in it is
governed by the terms of the contract.
• Most life insurance policies provide that a change of
beneficiaries can be made by the policy owner only by
notification to the company during the owner’s life.
Thus, a will cannot override the beneficiary
designation in a life insurance policy unless the terms
of the life insurance contract specifically allow this.

Property Passing By Contract –
Qualified Plan Death Benefits
• 401(k), 403(b), and 457 “qualified plan” death
benefits pass to the beneficiary named on the plan’s
beneficiary designation form
• The named beneficiary in the retirement plan
trumps the recipient named in a decedent’s will.
• The named beneficiary – even if an ex-spouse –
will receive the retirement benefits of a qualified
plan, so it is critical to update your beneficiary
designation forms every year!

Property Passing by Contract –
IRA Retirement Benefits
• IRA death benefits pass to the beneficiary named
on the plan’s beneficiary designation form
• The named beneficiary in the IRA plan trumps
the recipient named in a decedent’s will.
• The named beneficiary – even if an ex-spouse –
will receive the retirement benefits of an IRA
plan, so it is critical to update your beneficiary
designation forms every year!

Property Passing by Right of Survivorship
– Joint Bank Accounts, CDs, and Homes
Owned by Married Couples
• Joint checking and savings accounts – ownership
automatically passes to the joint account holder at the
time of the decedent’s death by operation of law
• Joint Certificates of Deposit (CDs) – ownership
automatically passes to the joint account holder at the
time of the decedent’s death by operation of law
• Homes owned by married couples – title to the home
automatically passes to the surviving spouse at the time
of the other spouse’s death

Property Held in a Living Trust
• Living Trust – an inter vivos (“among the
living”) trust is an instrument through which
the trust owner (grantor) transfers property to a
third-party custodian (the trustee) who
manages the property on behalf of an
individual(s) or entity named in the instrument
as the recipient (the beneficiary).
• Very flexible and useful estate planning tool

Property Passing By Transfer on Death
(“TOD”) Affidavit
• What is an affidavit?
– A sworn written statement confirmed by oath or
affirmation for use as evidence in a court
proceeding.
• Ohio law allows a property owner to sign an affidavit
that will transfer the owner’s interest in the property
at the time of death to a beneficiary outside of the
probate process.

Advantages of Non-Probate Assets
• Avoidance of the lengthy, expensive, and
bureaucratic probate process
• Transfers to beneficiaries are private matters
instead of being matters of public record
• No fees needed for executors or administrators
when decedent passes away (but, there are
trustee’s fees)
• No court costs or attorney’s fees

Ohio Statute of Descent and Distribution

Ohio Statute of Descent and Distribution –
R.C. 2105.06
• All of your real and personal probate property
will be distributed according to the Ohio
Statute of Descent and Distribution
• The legislative statutory scheme becomes your
default estate plan, regardless of where you
actually would have wanted your assets to go
• “Estate Planning by Neglect”

Ohio Statute of Descent and
Distribution – R.C. 2105.06
• If a married person dies without a
will and leaves a spouse and no
children, the surviving spouse
receives everything.

R.C. 2105.06
• If a person without a will dies
and leaves no surviving spouse
but surviving children, the
children receive everything in
equal shares of the estate.

R.C. 2105.06
• If the decedent is survived by a spouse
and by children, the amount received by
the surviving spouse depends on:
1. Whether the spouse is the natural or adoptive
parent of any surviving children of the decedent,
and
2. Whether the decedent was survived by one child
or more than one child

R.C. 2105.06
• If the decedent is survived by a
spouse and one child, and the spouse
is the natural or adoptive parent of
that child, the surviving spouse

R.C. 2105.06
• If the decedent is survived by one child
and the spouse is not the natural or
adoptive parent of the child (i.e., is a
foster/step-parent), the surviving spouse
takes the first $20,000 of the estate plus
½ of the balance.
• The other ½ of the estate passes to the
child.

R.C. 2105.06
• If the decedent is survived by more
than one child, and the surviving
spouse is the natural or adoptive
parent of all of the decedent’s
children, the surviving spouse

R.C. 2105.06
• If the decedent is survived by more than
one child, and the surviving spouse is the
natural or adoptive parent of at least one –
but not all – of the children, the surviving
spouse takes the first $60,000 of the estate
plus one-third of the balance.
• The remaining two-thirds of the estate
passes to the children.

R.C. 2105.06
• If the decedent is survived by more than
one child, and the spouse is not the natural
or adoptive parent (i.e., is a foster/step-
parent) of any of the children, the spouse
takes the first $20,000 of the estate plus
one-third of the balance.
• The remaining two-thirds of the estate
passes to the children.

“What happens if I die in Ohio
unmarried and without any kids
who survive me?”

R.C. 2105.06
• If the decedent is not survived by a
spouse or any children, the estate
passes to each of the decedent’s parents
by ½ each.
• If there is only one surviving parent, he
or she receives the entire estate.

R.C. 2105.06
spouse, any children, or parents, the
estate passes to the decedent’s
collateral next-of-kin, i.e., brothers and
sisters (including any
stepbrothers/stepsisters) and any
nephews and nieces by representation.

R.C. 2105.06
• If the decedent had no spouse, no
children, no parents, and no brothers or
sisters, then ½ of the estate passes to
decedent’s maternal grandparents, and
the other ½ passes to the paternal
grandparents.

R.C. 2105.06
• If one of the maternal or paternal
grandparents is deceased, then the ½
interest passes to the sole surviving
maternal or paternal grandparent.
• If both maternal or both paternal
grandparents are deceased, the ½
interest passes to their descendants.

R.C. 2105.06
• If both grandparents on the
maternal or paternal side are
deceased, and no descendants of
that grandparents’ side are living,
the ½ interest passes to the other
side’s grandparents.

Ohio Statute of Descent and Distribution
– R.C. 2105.06
spouse, children, parents, or
grandparents, then the estate passes
to the decedent’s collateral kin (i.e.,
next closest blood relatives).

R.C. 2105.06
• If there are no collateral kin (i.e.,
blood relatives), the estate is divided
up among the decedent’s stepchildren
or their descendants, who inherit the
estate in equal shares per stirpes (by
representation).

R.C. 2105.06
• Finally, if the decedent does not
leave any relative capable of
inheriting the estate, the assets
and property pass to the State of
Ohio by a process called escheat.

“Well Greg, that doesn’t sound
so bad. Why is it so important
for me to have a will?”

Definition of a Will
• A will is a legal instrument executed with
certain formalities that directs the
disposition of an individual’s property at
death.
• A will is revocable anytime during the
lifetime of the testator and only becomes
effective at the testator’s death.

Legal Requirements of a Valid Will
• Must be at least 18 years old
• Must be in writing (typed or handwritten)
• Must be signed at the end by the testator
• Must be signed in the presence of at least two
competent, disinterested witnesses (not
beneficiaries)
• Witnesses must sign the will in the presence of
each other

Advantages of Having a Will
• You can take control of the distribution of your property and assets
according to your own preferences, not the State of Ohio’s
preferences.
• You can name an executor of your choice instead of having the
court name an administrator on it own.
• You can appoint an executor and a successor executor.
• You can appoint guardians and successor guardians for your minor
children.
• You can appoint guardians for property management.
• You can provide for the allocation of estate taxes.

Advantages of Having a Will
• You can plan in advance for the payment of debts.
• You can designate the order of death in the event of
the simultaneous death of you and your spouse.
• You can provide for the distribution of property in
the event of a potential disclaimer by a beneficiary
under your will.
• You can provide specific provisions in your will to
reduce the risk of will contests among beneficiaries.

Disadvantages of Having a Will
• It costs money to get one drafted and in place.
• It may be uncomfortable to contemplate your own
death.
• Your life or job circumstances may change over time,
and the original will you get drafted may not reflect
your current wishes of where you want your property to
go when you die.
• Having a will in place does not avoid the probate
process (although it does shorten it).

Advantages of Not Having a Will
• No cost required.
• No time or energy required.
• Any property you own will be distributed
to your heirs who are living at the time of
your death in accordance with the Ohio
Statute of Descent and Distribution.

Disadvantages of Not Having a Will
• The probate process for an intestate estate is lengthy,
expensive, and bureaucratic.
• You cannot provide for distribution of your property
and assets according to your own preferences and
wishes.
• You cannot appoint a guardian for your minor
children.
• You cannot appoint an executor to sell property on
your behalf, pay your debts, and settle your affairs.

Profile of an Estate
Probate Assets
• Assets Held in Decedent’s
Name Only
• Assets Distributed in
Decedent’s Will
• Assets in Decedent’s Estate
if Decedent Died Without a
Will
• Property Held in Tenancy in
Common
Non-Probate Assets
• Living Trust
• Joint Checking and Savings
Accounts and CDs
• “Qualified Plan” with a
Designated Beneficiary
• “Payable on Death”
Accounts
• “Transfer on Death”
Property (Affidavit)

Decedent Dies
Intestate (No Will)
Decedent Dies
Testate (Will)
Non-Probate
Assets
Time to Administer 12 months 6 – 9 months 2 – 4 months
Attorney’s Fees 4½% of estate 2 – 4½% of estate $0
Administrator’s/
Executor’s Fees
4% of estate 2-4% of estate $0
Court Costs $300 $200 $0

Asset Title Value
House Mom Only $150,000
Joint Checking Account Mom and Daughter $20,000
Joint Certificate of Deposit Mom and Daughter $80,000
Roth IRA Mom (Payable to Son and
Daughter)
$50,000
TOTAL ESTATE $300,000
Assume that Mom has a will in place that leaves all of her assets
equally to Son and Daughter. Who takes what? Why?

Asset Daughter Son
House (Probate Asset) $75,000 $75,000
Checking Account (Non-
Probate Asset)
$20,000 $0
Certificate of Deposit
(Non-Probate Asset)
$80,000 $0
Roth IRA (Non-Probate
Asset)
$25,000 $25,000
TOTAL DISTRIBUTION $200,000 $100,000
Is this distribution fair? What if Mom and Daughter were estranged from
each other? What if Son lived with Mom and took care of her every day
the last five years of her life? Does that make a difference? Should it?

What is a Financial Power of
Attorney?
• A financial power of attorney is where you
designate an attorney-in-fact of your choosing
to enter into financial transactions on your
behalf. Often, this is a spouse or other family
member.
• The attorney-in-fact may then sign checks, tax
returns, deeds, or other financial transactions
that you have authorized.

Types of Financial Powers of
Attorney
• Durable v. Non-Durable Power of
Attorney
• General v. Special or Limited Power
of Attorney
• Current v. Springing Power of
Attorney

Durable Power of Attorney
• A durable power of attorney is one that specifically
states that it remains valid even after the person
granting the power becomes incapacitated.
• This is what most people want because it helps them
avoid the necessity of having their family request the
appointment of a guardian by the probate court.
• If the power of attorney does not include this
language, the authority of the attorney-in-fact
terminates upon your incapacity.

General v. Special or Limited Power
of Attorney
• A general power of attorney is granted to someone to
conduct any and all business for you. As a practical
matter, it is generally beneficial to include an all-
encompassing listing of powers granted to the
attorney-in-fact due to certain court decisions.
• A special or limited power of attorney relates to
powers granted to someone to transact specific and
identified business for you, such dealing with the IRS
or participating in a real estate closing.

Current v. Springing Power of
Attorney
• A current power of attorney becomes effective as
soon as the document authorizing the power is
signed.
• A springing power of attorney becomes effective at
some later time, usually upon the happening of some
triggering event in the future when it “springs” into
effect. Typically, it occurs when you are no longer
able to make decisions for yourself.

What is a Health Care Power of Attorney?
• A health care power of attorney – or “durable power of
attorney for health care” or “health care proxy” –
designates another person to make health care decisions
for you when you are unable to communicate your own
preferences due to incompetency.
• The power can relate to life termination and life-time
health care decisions, such as having access to and
releasing medical records, employing and terminating
health care personnel, and selecting appropriate medical
facilities for you.

What are the characteristics of a Health
Care Power of Attorney?
• It names an individual you trust to make a wide variety of
health care decisions for you at any time you cannot do so
for yourself, whether or not your condition is terminal.
• It becomes effective only when you cannot make your
own decisions regarding treatment.
• It requires the person you appoint to make decisions that
are consistent with your wishes.
• It will not overrule a living will if you have both
documents.

What is a Living Will?
• A living will is a legal document that allows you to
express your intentions in advance – sometimes called
“advance directives” – regarding the withholding or
withdrawal of life-sustaining treatment if you should
become terminally ill or permanently unconscious.
• A living will becomes effective when you are no longer
capable of making informed decisions about life-
sustaining treatment on your own.
• It becomes your voice when it is communicated to the
attending physician.

A Living Will Is NOT a Will
• DO NOT confuse a “Last Will and Testament” with a
“Living Will Declaration.” They are different.
• A “Last Will and Testament” is a legal document you sign
that directs how your property and assets will be disposed
of when you pass away.
• A “Living Will Declaration” is a legal document that
operates as an “advance directive” to your physicians if
you become terminally ill or permanently unconscious.
• A “Living Will” is misnamed because it has nothing to do
with “living” and it is not a “will” at all.

What Are The Characteristics of a
Living Will?
• It becomes effective only when you cannot communicate your wishes
in advance and become permanently unconscious or terminally ill.
• It informs your doctor as to whether you wish to have life-support
technology used or not used, and it gives doctors direction about the
extent of medical treatment you want under these conditions.
• It specifies under what conditions you would want artificial feeding
tubes and fluids to be withheld.
• It can be changed or revoked by you at any time, but cannot be
changed or revoked by anyone else.
• It will be followed for a pregnant woman only if certain conditions
apply.

The Legal Requirements of a Living
Will
• Must be a competent adult at least 18 years old
• The living will must be dated and voluntarily signed
• The living will must be either properly witnessed or
properly notarized
• The living will must specifically authorize the
withdrawal or withholding of hydration (water) and
nutrition (food) in the event that they are unnecessary
for comfort

How Does a Living Will Get Activated?
• A living will activates when the attending physician and
at least one other physician determine that the patient is in
a terminal condition and is incapable of making
informed decisions, or the patient is permanently
unconscious.
• The physician then has a duty to either (1) implement the
wishes of the patient as conveyed in the living will, or (2)
inform the patient if the facility or the physician cannot or
will not comply with the patient’s choices in the living
will.

How Does a Living Will Get Activated?
• If the patient’s wishes cannot be carried out by the
physician or hospital, the physician or hospital must
allow the transfer of the patient to a physician or hospital
that will comply.
• The physician or hospital cannot interfere with
transferring the patient to another facility that will comply
with the patient’s wishes.
• The attending physician must note in the patient’s medical
record that there is a living will on file.

What if the Patient Has both a Health Care
Power of Attorney and a Living Will?
• It depends on the specific wording of the Health Care
Power of Attorney.
• A Health Care Power of Attorney can allow an attorney-
in-fact to make both lifetime and life termination health
care decisions.
• The provisions regarding withdrawal or withholding of
life support systems are the same as a Living Will.
• But, a Living Will takes precedence over a health care
power of attorney for life termination decisions.

Is it really necessary to have both a Health
Care Power of Attorney and a Living Will?
• It depends on the specific wording of the Health Care
Power of Attorney.
• If there is any potential for internal family conflict (i.e.,
Karen Ann Quinlan, Nancy Cruzan, and Terry Schiavo
cases) over what you would have wanted as far as life
termination decisions are concerned, it is best to clearly
spell out your wishes in a Living Will even if you have a
Health Care Power of Attorney in place.
• Remove any and all doubt about your wishes in advance.

Five Easy Ways You Incorporate Pleasant Ridge
Presbyterian Church Into Your Estate Plan
• Designate PRPC as a primary or contingent beneficiary of
your 401(k), 403(b), or 457 retirement plan
• Designate PRPC as a primary or contingent beneficiary of
your traditional, nontraditional, or Roth IRA
• Leave a specific gift to PRPC in your will
• Designate PRPC as a beneficiary of the residuary clause
in your will
• Donate the value of appreciated stock to PRPC and
receive a charitable tax deduction on your income taxes

Estate Planning and Planned Charitable
Giving Seminar – Review of Topics
• What happens to my property if I live in Ohio and die
without a will?
• Who will take care of my kids if I die without a will?
• What is a will and why do I need one?
• What does “probate” mean?
• Are there ways to avoid “probate”?
• What are some easy ways I can leave a charitable gift
to PRPC in my estate plan?

What happens to your property
if you live in Ohio and die
without a will?

It will be distributed according to
the method outlined in the Ohio
Statute of Descent and
Distribution.

Who will take care of your kids
if you die without a will in
Ohio?

A guardian will be appointed by
the probate court after a special
proceeding.

What is a will and why do you
need one?

A legal instrument executed with
certain formalities that directs the
disposition of your property at
death. A will allows you to take
control of the distribution of your
assets according to your own
preferences.

The court procedure that must be
followed in order to distribute
certain types of property the
deceased person owned at the
time of death.

Are there ways to avoid
“probate”?

Yes, by holding your property
and interests in one of the four
categories of non-probate
assets.

What are some easy ways I can
incorporate a charitable gift to
PRPC into my estate plan?

1. Designate PRPC as a percentage
beneficiary of your retirement plan.
2. Leave a specific amount of money
to PRPC in your will.
3. Designate PRPC as a beneficiary
of the residuary clause in your will.
4. Donate the value of appreciated
stock to PRPC.

“In estate planning, an ounce of
prevention is worth a pound of cure.”
Greg Laux
Kohnen & Patton LLP
201 East Fifth Street, Suite 800
Cincinnati, Ohio 45202
(W) 513-345-4677
(C) 804-363-8857
glaux@kplaw.com

Estate Planning and Planned Charitable Giving Presentation

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (19)

Ähnlich wie Estate Planning and Planned Charitable Giving Presentation

Ähnlich wie Estate Planning and Planned Charitable Giving Presentation (20)

Estate Planning and Planned Charitable Giving Presentation